Is Government Behind Increase in Milk Prices?

Economists predict milk prices could increase by as much as $.30 a gallon. Some say its supply and demand, coupled with higher feed prices. Others say it is government manipulation of the milk business.

I first learned that the federal government controls milk prices when I owned a convenience store. I aggresively protested the rise of retail milk prices two years ago that sent my customers to big discount stores for relief. Ignorantly accusing our milk distributor of price gouging, I was astonished to learn from our supplier that raw milk prices are controlled by the federal government, and that program ultimately leads to the retail price of milk. Political activists, watchdog groups, and one small Arizona dairy farmer have set out to change the socialist scheme of government in milk.

Most U.S. dairy farmers operate under a 1930's federal program that was designed to give small dairies a sure market for their milk and give consumers equitable retail prices across the nation. Farmers who participate in regional pools operated by federal or state governments, deliver raw milk to cooperatives or food processors. The farmers get a guaranteed price for the raw milk whether it ends up in a jug, in cheese, in butter, or in ice cream. Dairy farmers can opt to do business outside of the pool, but it is risky because it might end up with more milk than it can sell. As one small Arizona dairy farmer learned, the risk of not participating can also lead to a losing fight with big business.

HOW DOES IT WORK?